Japan’s 10-year bond yields track U.S. peers to scale 3-week high

Reuters

15:23 JST, April 18, 2022

TOKYO (Reuters) — Japan’s 10-year government bond yields touched a three-week high in early trade on Monday following a sell-off of U.S. Treasury peers over the weekend after a batch of economic data was likely to keep the Federal Reserve on its tightening path.

The 10-year JGB yield JP10YTN=JBTC rose as high as 0.245% before falling to 0.240%, but flat from the previous session.

The benchmark 10-year U.S. Treasury yield jumped on Thursday in a holiday-shortened week. 

Investors were wary that the Bank of Japan might step in to defend its yield target, by offering to buy unlimited amount of the 10-year debt at a fixed rate, as it has done previously.

The central bank offered to buy unlimited amount of 10-year bonds at 0.25% in February and March, in an effort to defend its yield curve against the global tide of higher interest rates.

“The BOJ’s intervention could accelerate yen’s decline against the dollar,” said Takenobu Nakajima, a chief rates strategist at Nomura Securities.

“But the central bank’s priority seems to be defending its yield target, rather than preventing the yen from falling further,”

The yen hit fresh two-decade lows on Monday, from Japanese policymaker comments on Monday, before both Bank of Japan Governor Haruhiko Kuroda and Finance Minister Shunichi Suzuki voiced concerns. 

The 20-year JGB yield JP20YTN=JBTC rose 1.5 basis points to 0.740% and the 30-year JGB yield JP30YTN=JBTC rose 2.5 basis points to 0.955%.

The two-year JGB yield JP2YTN=JBTC edged up 0.5 basis point to minus 0.060%.

The five-year yield JP5YTN=JBTC was flat at 0.025%.

The 40-year JGBs were not traded and the yield JP40YTN=JBTC remained at 1.015%.

Benchmark 10-year JGB futures 2JGBv1 fell 0.08 point to 149.33, with a trading volume of 7,987 lots.